By Prof Albert Sanchez-Graells, Professor of Economic Law (University of Bristol Law School), Dr Kirsi-Maria Halonen, Senior Lecturer in Law (University of Lapland, Finland), Prof Roberto Caranta, Professor of Administrative Law (Turin University, Italy)
Together with competition and integrity, transparency is one of the fundamental pillars of every procurement system around the world. Much of the efforts to ensure probity in the expenditure of public funds through procurement concentrate on mandating competition-enabling transparency of contract opportunities and accountability-facilitating transparency of the outcome of procurement processes. In the European Union, the 2014 Public Procurement Package continued to place the principle of transparency amongst its general principles and established rather detailed disclosure obligations, including the mandatory publication of a wider range of electronic notices (including for contractual modifications), a consolidation of the tenderers’ rights to access information about the procurement process, and higher standards for documentation and record-keeping by the contracting authorities.
More generally, the push for the development and adoption of open data standards for public procurement—in particular by the Open Contracting Partnership—has renewed efforts to bring procurement under the open government umbrella and to facilitate higher levels of transparency and accountability, in particular through big data analysis. In the European Union, the Commission highlighted the importance of procurement transparency in its 2017 Communication on ‘Making procurement work in and for Europe’, stressing that ‘The digital transformation, the growing wealth of data in general and the availability of open data standards offer opportunities to create better analytics for needs-driven policy-making and warning systems to signal and tackle corruption in public procurement’. The Commission thus established the goal of increasing transparency, integrity and better data as one of its six key strategic priorities. In particular, the Commission advocated the creation of national public contract registers by the Member States, providing transparency on awarded contracts and their amendments to enable dialogue with civil society and hold governments more accountable.
This high-level push for procurement transparency could however obscuree the rather more nuanced and complicated interactions between transparency and other goals of procurement regulation—in particular the reliance on competition for public contracts as a mechanism to unlock value for money, and the development of an effective system of procurement remedies to safeguard the legitimate interests of tenderers for public contracts—and between the rules on transparency within procurement law and in the broader setting of public and administrative law and, in particular, freedom of information and access to public sector information rules.
Taking this latter interaction first, it is worth recalling that the European Union and its Member States have quite developed systems of freedom of information regulation empowering citizens and civil society organisation to access a wide range of public sector information and documents. Given that public procurement is a public sector activity, the rules on freedom of information apply concurrently with the transparency rules within the procurement rules. However, their coordination is not always necessarily easy, as the standards in both sets of rules diverge in terms of e.g. active standing to request access to information, substantive tests to balance competing interests between disclosure and reservation of information, or procedural rules and time limits. Different jurisdictions across the EU guarantee varying levels of access to procurement information and documentation under freedom of information rules, in part due to their administrative law tradition and their broader approaches to open government. Therefore, the effective level of access to procurement information and documentation varies across the EU, not solely as a result of diverging interpretation of the procurement rules themselves, but as a result of broader discrepancies in the national systems of freedom of information rules.
Additionally, the commercial or business sensitivity of some of the information on public procurement complicates the regulation of its transparency and disclosure. The need to preserve commercial and business interests in the context of procurement transparency was explicitly stressed by the 2016 Trade Secrets Directive, in recognition of the fact that excessive disclosure could disincentivise participation in public tenders. Additionally, the potential negative impact that excessive market transparency can have on facilitating bid rigging between public contractors has been stressed in rather clear terms by international organisations, such as the OECD, and contracting authorities are required to take this into consideration by the EU procurement rules themselves. On the round, then, transparency in procurement requires a delicate balance between ensuring sufficient access to procurement information while preserving business know how and market competition. Unsurprisingly, there are rather wide variations in the approach to such balance across EU Member States.
Finally, access to procurement documentation is instrumental to enable tenderers to challenge procurement decisions they consider inadequate or harmful to their interests. Such private litigation of procurement decisions is the foundation of the system of procurement remedies created by EU law. In the context of procurement challenges, the regulation of transparency is thus further complicated by the additional need to balance the commercial and business interests discussed above with the right to an effective remedy of disappointed tenderers. Once more, EU Member States have developed different approaches.
There are thus big divergences in procurement transparency across the EU, which ultimately create a significant challenge for the European Commission’s strategic goal of increasing transparency, integrity and better data. As things stand, it seems that these divergences will continue in the future, not least due to their explicit recognition in the context of the very recent revision of the 2003 Public Sector Information Directive. The main aim of this revision was to increase the extent to which public sector data can be re-used, in particular to enhance evidence-based policymaking and increase efficiency in public administrations, and to transform public sector data into a critical asset for the development of new technologies, such as artificial intelligence. However, the 2019 Open Data Directive—which Member States need to implement by 2021—continues to exclude from its scope documents, such as sensitive data, which are excluded from access by virtue of the freedom of information regimes in the Member State, including on grounds of ‘commercial confidentiality (including business, professional or company secrets)’.
Therefore, unless the European Commission undertakes new work to try to develop a common framework for the regulation of transparency in public procurement, it seems that the existing divergences will be perpetuated well into the ‘age of big data’.
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*This piece was originally published on the EdwardElgar Publishing blog. You can view the original post, here.*